In general, trade is considered to be boring. Besides economists and businessmen, hardly anyone follows the news on trade and business – it is too complex and burdensome to understand and debate it. However, when it comes to free trade agreements, people can get mobilized. So it happened on Saturday, when tens of thousands of Europeans were on the street to protest against the Transatlantic Trade and Investment Partnership (TTIP), a free trade agreement between the U.S. and the EU.
What is the TTIP about?
Already since the early 1990s, the U.S. and the EU want to achieve some kind of free trade agreement. In July 2013, after long pre-negotiations, the first round of the current negotiation process started in Washington D.C., aiming for an agreement that should not be a classical free trade agreement, because the levies are already now almost close to zero. The TTIP is focusing in particular on common regulation standards and overcome other non-tariff barriers that should boost growth in the U.S. and in Europe. In fact, there are three pillars: 1) better market access, 2) specific regulation to cut the costs, and 3) broader rules and principles and modes of co-operation to make it easier to export, import and invest.
Three aims that will be achieved according to EU Commissioner for Trade, the Swedish Cecilia Malmström, in a recent speech in February 2015: prosperity, effective government and our collective voice in the world. For both sides it would be easier to sell their products, regulatory standards would be harmonized, thus allowing for selling the same product in both markets. One would think that this should be easy in the first place, but just thinking about the car industry, there are very different standards out there.
The actual effect of the TTIP is hard to measure, not least because it very much depends on the actual text that will be agreed upon. However, a study claims the U.S. and the EU claim that it would raise their GDP by 0.4% respectively 0.5%, create jobs (two millions, says Bertelsmann), better payments for workers, and allow for more growth for their companies. Even the rest of the world would benefit, claims a study. And yet, this would happen when the TTIP would be “ambitious” (whatever that means). So everything sounds to be great, doesn’t it?
The TTIP as a “threat”
Not really, at least it does not sound good at all for many civil society groups in Europe. The TTIP is portrayed as a neoliberal project of evil as one can see in the most popular site on the web, “Stop TTIP”. Their claim is that Europeans would suffer a lot: lower standards for food, environment and labor; in fact, it is even a “threat to democracy.”
For the critics of the TTIP, a leaked draft in March 2014 should be the proof that an agreement would have many negative consequences. It is difficult to understand though when one is reading the 45 pages why it should be dangerous. Due to the many protests and concerns, the agreement was not signed, as originally planned, by the end of 2014, but the negotiators hope to finish by the end of 2015. The current protests though hope to convince the European heads of state to change their opinion and scrap the deal. This seems to be hardly possible. While the German-speaking news had a lot of coverage about the demonstrations against the TTIP, in other countries even left-leaning papers, like The Guardian, did not include coverage of the protests.
Many EU citizens have fears due to emotional debates, misinformation and lack of knowledge. This has been used by “Stop TTIP” that collected 1,7 million signatures for a European Citizen Initiative (ECI) with the aim to stop the TTIP. However, the Commission already rejected this proposal of a German NGO in September 2014 because an international agreement cannot be decided upon through that instrument of direct democracy. Although the initiative continues informally, it is more of a symbolic initiative that is quite impressive though with the signatures collected so far (and they want to get overall two million).
Among the fears that are raised by the people who get “informed” by critics of the TTIP are the following: public services need to be privatized (and the implication is that they would deteriorate or would get very expensive), the regulatory standards would be significantly lowered (particularly related to genetically modified food), that the so-called “investor-to-state dispute settlement” would undermine the sovereignty of European countries in favor of huge U.S. transnational companies and the negotiation process between the EU and the U.S. is untransparent.
Threat #1: Public services are privatized
The fear among many European citizens is that public services like water or health will be privatized as a consequence of TTIP. However, Malmström made clear that 1) public authorities do not need to open their market to private providers if they do not want to and keep their monopolies, 2) no service needs to be privatized or outsourced in case they do not want to, 3) policy change is possible and outsourced services can be brought back to the public sector whenever it is deemed necessary, as long as property rights are respected. Therefore, no privatization will happen as a consequence of the TTIP as long as a member state inside the EU decides otherwise.
Threat #2: Lower standards for food
Another fear of many Europeans is that the TTIP will lower the regulatory standard significantly, because in their perception the U.S. has a comparatively low standard. Particularly controversial is genetically modified food (GMO), because a large junk of Europeans is fundamentally opposed to that kind of food, mostly due to safety concerns, that is available in the U.S. without being labeled as GMO. Yet, Malmström said that neither GMOs nor hormone food will be part of the negotiated framework, because the regulatory standards are simply too different and TTIP will not solve them.
In fact, other areas of common regulation will mean less cost for companies, particularly the small and middle-sized enterprises, because they cannot afford to pay twice for regulations (one time inside the EU and another time in the U.S.). Having the same regulations would allow for less costs and the possibility to compete on other markets. That in turn should be a driver for more innovation and better offers for consumers on both sides of the Atlantic. When it comes to common regulations, the EU and the U.S. are negotiating about areas where they already have rather similar standards like cars, pharmaceuticals, medical devices, cosmetics, and financial services. In other words, different rules should be harmonized when both have the same standards.
Threat #3: Democracy is undermined
The so-called Investor-State-Dispute-Settlement (ISDS) is an instrument of public international law and a body that allows foreign investors to sue for damages if they believe that they have suffered losses because of any laws or other measures that were taken by the state parties. The fear is that big multinationals from the U.S. will use those ISDS to undermine European standards, not least environmental and consumer protection. Some companies like Philip Morris have used the ISDS mechanism to sue the Australian government, a move that has been widely criticized.
The European Commission argues that it would not sign such kind of ISDS but rather one that would guarantee the investors the necessary protection but at the same time would not be an instrument to build up fraudulent cases like the one of Philip Morris. Moreover, it would be key for small and medium-sized enterprises in Europe to have the legal protection because otherwise they can get easily into troubles with the American legal system. It is also clear though that a regular ISDS cannot overturn public policies, as the critics claim. Moreover, it is common practice in the EU with ISDS clauses in more than 1,400 bilateral trade agreements.
Lack of transparency?
Moreover, European protesters criticize that they do not know the negotiation positions of the EU. In general, it is common in trade negotiations that one does not publicly discuss its positions because it is lowering the flexibility with the trade partner. However, the EU Commission under Malmström decided to publish the negotiation positions online to counter the claims that the process would be untransparent. One can find these papers here. Moreover, also the national parliaments inside the EU do get the access to EU Commission papers.
Trade for growth
Although there are many claims out there, that people are continuously getting apathetic about politics, it can be observed that movements can mobilize the people because they are creating fear by using existing negative emotions against actors that are perceived to be a threat. In Europe, this includes the U.S. government and “big business.” Often, the information that is provided is problematic because it does not tell the whole story. On a more positive note, more (young) people are politicized and forced to think about the system we are living in. Hopefully, this process of politicization allows as well to see both sides of the coin, and not just the negative one (as it seems to happen so often in Europe).
At the same time, it is showing yet another crisis of the EU leadership when it deals with its citizens. Although Malmström has travelled recently quite a lot to EU member states to talk with EU citizens, it is usually a rather small event does hardly allow for the participation of concerned citizens. Moreover, the material that the Commission provides is readable like the “10 myths about the TTIP”. However, the EU Commission could do a better work and be more precise.
It seems to be likely the TTIP will pass. Afterwards, the world will continue to rotate. Citizens inside the EU will not be exploited as a consequence. However, many people have moved away from the EU that is perceived to be the representative of neoliberal policies. Many claims of the critics seem to be not true and yet they continue to be popular due to the fear that people have of TTIP. The EU – and its citizens – will need to think more than ever about new forms to create policy, include its people and provide information that is easily understandable and accessible.
The featured image is (c) glenniswillmot.eu